[ESG Talk] Overseeing ESG risks in supply chain: procurement with a purpose

Asia's Tech News Daily

[ESG Talk] Overseeing ESG risks in supply chain: procurement with a purpose
Bae, Kim & Lee expert adviser Lee Yeon-woo (Bae, Kim & Lee)In 2022, an area that is likely to strain companies’ transition toward a resilient, sustainable economy is the ESG risks in the supply chain. Companies must now closely monitor issues stemming from climate change, labor rights and health and safety throughout the procurement process.

Supply chain due diligence

Until recently, the management team’s focus on supply chain and procurement has been primarily on technical quality, cost-effectiveness, speed of delivery and reliability. However, the awareness of supply chain risks emerged as domestic and international regulations around workforce health and safety incidents, raw material procurement and environmental hazards increased.

In 2017, the United Nations Principles for Responsible Investment emphasized the importance of due diligence on supply chains, first to trace transactions among countries to examine environmental impacts. Eventually, the institution found that the supply chain is a crucial business function that tracks human rights and corruption. However, some malpractices induced more significant operational problems such as procurement suspension, and reputational risks from labor issues that could exceed the impact of environmental externalities.

The European Parliament published a Sustainable Finance Report in early 2018 by highlighting the importance of improving business practices for stakeholders. It recommended establishing sustainable strategies and targets through materiality assessment and appropriate due diligence in the supply chain. The mandate called for an overarching, mandatory due diligence framework that includes a duty of care to be fully phased in within the transition period.

Germany approved the Supply Chain Due Diligence Act last summer by incorporating UN Guiding Principles on Business and Human Rights. Other national governments and global institutions such as the Responsible Business Alliance are reinforcing supply chain management in minerals, labor and factory operations to enhance sustainable production.

Social performance

In the business world, the demand for improved social value through better inclusion and transparency is making companies comply with these trends. Large multinational corporations with extensive supply chains in the semiconductor industry such as Intel and Lam Research explicitly require their top tier suppliers to conduct the same level of supply chain risk assessment by implementing the international principles.

The global economy witnessed how the COVID-19 crisis exposed critical supply chain weaknesses, particularly among suppliers with poor workplace health and safety practices. Now that supply chain has become a more critical issue than before, companies are strategically embracing the concept to help companies gain economic resilience. Corporate manifestations around procurement with purpose and supply chain diversity are increasing to emphasize how supply chain management can further derive value and profit. 

A recent trend report by Sustainalytics detailed how global companies are conducting more in-depth and end-to-end supply chain due diligence. Lacoste, Calvin Klein and Adidas had to respond to immense operational and reputational risks when their lower-tier suppliers were found dumping chemicals into Chinese rivers. Following these incidents, multinational firms recognized the importance of enhancing ESG visibility of their lower-tier suppliers’ social performance.

Fortunately, a greater number of companies are also realizing that supply chain risks can turn into a significant opportunity factor if well managed. IBM, Microsoft and Aldi Nords actively pursue supply chain diversity and net-zero supply chain — a net negative for the company itself — as part of their ESG priorities under a procurement with purpose scheme.

Stricter enforcement for health, safety

While supply chain management is becoming more critical abroad, South Korea is enforcing a stricter rule for large enterprises on health and safety. Starting next year, the Serious Accident Punishments Act will bring responsible executives or owners under criminal and civil liability of severe accidents that cause serious bodily harm at the worksite or in public.

SAPA is purposed to protect all workers, including those in partnering companies, as well as ordinary people. It also includes any accident occurring from raw materials and products, public facilities and transportation for the negligence of supervision on any defects caused in stages of the supply chain such as design, manufacturing, installation and maintenance.

Korea’s SAPA may seem as pervasive supply chain management regulation focused on health and safety issues. Nevertheless, the requirement to install stringent risk preventive systems beyond the company’s supply chain is what society demands for businesses in South Korea following tragic events like a warehouse blaze in Icheon, Gyeonggi Province.

Recently, the Global Reporting Initiative, one of the most widely used reporting frameworks, announced its 2021 amended criteria by integrating elements of the supply chain disclosure. Other initiatives are likely to follow and recommend companies to disclose information about supply chain management alongside their ESG risks in the report. 

As regulations and pressure increase, companies should think of more creative ways to align ESG strategy with risk management. Materiality assessment, where companies evaluate all stakeholder issues around sustainability imperatives, is a starting point in strategizing ESG. It will help companies to oversee ESG risk not only as costs, but a chance to enable value-driven growth. 

Lee Yeon-woo
Lee Yeon-woo is an expert adviser at the Korean law firm Bae, Kim & Lee. — Ed.

By Korea Herald (khnews@heraldcorp.com)

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Costly Airbus paint flaw goes wider than the Gulf

1 / 3Costly Airbus paint flaw goes wider than the GulfAn undated image shows what appears to be paint peeling, cracking and exposed expanded copper foil (ECF) on the fuselage ... Read more »

Bitcoin climbs back above $57,000 as cryptocurrencies rebound from sell-off

The value of Bitcoin (BTC) has exceeded the threshold of 66,895 dollars for the first time in his history.Chesnot | Getty Images Bitcoin and other cryptocurrencies surged Monday after a ... Read more »

New travel rules ‘completely ineffective'

Tougher Covid-19 restrictions on international travel have been “completely ineffective in the past”, according to the former boss of British Airways’ parent company. Ex-IAG chief executive Willie Walsh described the ... Read more »

Bitcoin, ethereum bounce back as crypto follow stocks in rebound

Major cryptocurrencies slumped on Friday as a new coronavirus variant sparked concerns across the broader market. Photo: Kirsty O’Connor/PA via Getty The cryptocurrency sector rebounded on Monday, following a recovery ... Read more »

BP plans large-scale green hydrogen project in UK

FILE PHOTO: An illuminated BP logo is seen at a petrol station in Gateshead, Britain September 23, 2021 (Reuters) – BP said on Monday it plans to set up a ... Read more »

Nascent green jobs market exposes UK regional disparities, says PwC

Each new green job generates a further 1.4 jobs — rising to 6 jobs for the energy sector. Photo: Matthew Childs/Reuters The UK's new net zero economy is filtering through ... Read more »

CEO of Spain's BBVA says lira devaluation "is helping us" in Garanti deal

Spanish bank BBVA‘s Chief Executive Officer Onur Genc speaks during the annual results presentation at the company’s headquarters in Madrid MADRID (Reuters) – Chief Executive Officer of Spain's BBVA Onur ... Read more »

Amigo Loans warns it will go bust unless it resumes lending

Photograph: M4OS Photos/Alamy Sub-prime lender says it has set aside £344m for customers who said they were mis-sold loans at high rates The troubled sub-prime lender Amigo has said it ... Read more »

China's CNOOC starts production at second phase of UK Buzzard project

China National Offshore Oil Corp (CNOOC) headquarters in Beijing BEIJING (Reuters) – CNOOC Ltd, a listed branch of China National Offshore Oil Corp (CNOOC), said on Monday it had started ... Read more »

Politics latest news: Boosters for all announcement expected 'within hours'

Britain too attractive to migrants, say French Bexley Blue Wallers could give Boris a bloody nose  Action on NHS waiting lists expected amid omicron  Whispers suggest Joe Biden to replace Harris  The announcement ... Read more »

AJ Bell takes on Freetrade with commission-free investing app

The mascot for AJ Bell’s new investment app Dodl (AJ Bell) City stockbroker AJ Bell is going head-to-head with new, app-only investment platforms by launching by its own brand pitched ... Read more »

Jade Forest Raises $1 Million

Jade Forest, a non-alcoholic beverage brand, has raised $1 million in a funding round led by Mumbai Angels Network. Jade Forest The funds will be utilized for geographical expansion and ... Read more »

'No point in living' - Pensioners pushed into poverty due to energy bill hike

Those over the state pension age are sounding the alarm that “there won’t be any point in living” unless more support is provided. In response to this ongoing problem, experts ... Read more »

European stock markets rebound despite Omicron COVID variant fears

Shoppers walk along Regent Street, London as a third case of the Omicron coronavirus variant has been detected in the UK, the Health Security Agency has said. Photo: Pietro Recchia/SOPA ... Read more »

Latest Covid wave shouldn't change economic outlook much - ECB's Villeroy

FILE PHOTO: Bank of France Governor Francois Villeroy de Galhau PARIS (Reuters) – The latest wave of COVID-19 and the emergence of the new Omicron strain is not expected to ... Read more »

Cladding crisis could threaten UK's financial stability, say reports

Cladding is removed from the side of Whitebean Court in Salford, Manchester. Photo: Andrew Yates/Rueters New reports have revealed that concern is mounting at the Bank of England (BoE) about ... Read more »

French minister Beaune sees Dec 10 deadline on Brexit/fishing licence talks

French fishermen block the Eurotunnel Freight Terminal as part Brexit protests PARIS (Reuters) – French European Affairs Minister Clement Beaune said on Monday that he was eyeing a December 10 ... Read more »

European shares rebound from Omicron-fuelled selloff

German share price index DAX graph is pictured at the stock exchange in Frankfurt (Reuters) – European shares rebounded on Monday from their worst selloff in more than a year, ... Read more »

Hammerson in talks over £140m sale of Silverburn shopping centre

Retail property giant Hammerson is in talks over the sale of the Silverburn shopping centre near Glasgow for around £140 million. Shares in the company moved higher on Monday after ... Read more »

Sterling holds above 11-month lows on Omicron concerns

FILE PHOTO: A Union Jack themed Visa credit card is seen amongst British currency in this photo illustration taken in Manchester, Britain LONDON (Reuters) – Sterling held above an 11-month ... Read more »

Bharat Financial Inclusion top officials resign

Top executives of Bharat Financial Inclusion (BFIL), a fully-owned subsidiary of IndusInd Bank , have resigned from the company last week, the bank said on Monday. The bank said it ... Read more »

FTSE 100 Live: Stocks firm and oil prices higher after Friday's Covid omicron sell-off

(ESI) Global markets showed signs of steadying today after Friday's violent reaction to the discovery of the Covid omicron variant. The FTSE 100 index slumped 3.6% before the weekend but ... Read more »

Irn Bru maker AG Barr to beat profit forecasts amid strong sales momentum

Irn-Bru manufacturer AG Barr has revealed that its profits for the year are expected to beat market forecasts after strong sales continued in recent months. The Scottish business, which also ... Read more »

Gazprom Reports Record Third-Quarter Profit After Gas Surges

(Bloomberg) — Gazprom PJSC’s third-quarter net income surged to an all-time high as gas prices reached fresh records amid Europe’s deepening energy crisis. Most Read from Bloomberg Net income rose ... Read more »

Implats Revives Bid to Control South Africa's Royal Bafokeng

(Bloomberg) — Impala Platinum Holdings Ltd. offered to buy Royal Bafokeng Platinum Ltd. for about 43.4 billion rand ($2.7 billion), reviving its pursuit of a smaller South African rival after ... Read more »

Irn-Bru owner's annual profit to exceed pre-pandemic levels

FILE PHOTO: Irn Bru is seen on the shelves of Scotch Corner in Pitlochry, Scotland (Reuters) – A.G. Barr expects annual profit to exceed pre-pandemic levels and beat current market ... Read more »

3 Resilient Blue-Chip Stocks to Buy Now

Resilient Blue-Chip Stocks Are Attractive in the Current Market Environment What are some of the typical qualities that make a company resilient? It’s usually a business that can generate profits ... Read more »

5 Reddit Penny Stocks To Watch This Week

Reddit Penny Stocks To Watch as November Comes to an End  With November almost over, plenty of penny stocks continue gaining momentum. Although it can be difficult to stumble upon ... Read more »

Should You Buy G-III Apparel Group (GIII) Ahead of Earnings?

Investors are always looking for stocks that are poised to beat at earnings season and G-III Apparel Group GIII may be one such company. The firm has earnings coming up ... Read more »

Bet on the Metaverse's Build-Out with a Stake in Matterport

InvestorPlace – Stock Market News, Stock Advice & Trading Tips Investorplace.com – InvestorPlace Ready to step directly into the metaverse? Or at least, get portfolio exposure to it? If so, ... Read more »

Gold IRA: Is This New Type of Retirement Account a Good Post-Pandemic Investment?

Today’s precarious economic environment makes a strong argument for alternative retirement investments for the post-pandemic era. This, at least, is the prevailing sentiment among many investors and market-watchers who fear ... Read more »

Polkadot Stands to Gain Now That the First Parachain Auction Closed

InvestorPlace – Stock Market News, Stock Advice & Trading Tips Investorplace.com – InvestorPlace Polkadot (CCC:DOT-USD) is a $38 billion market cap cryptocurrency that is ranked as the eight largest, according to ... Read more »

ShibaSwap Explained: Everything You Need to Know About the Shiba Inu Crypto Ecosystem

InvestorPlace – Stock Market News, Stock Advice & Trading Tips Investorplace.com – InvestorPlace Almost every crypto investor has heard of the Shiba Inu (CCC:SHIB-USD) token at this point. The altcoin ... Read more »

CrowdStrike (CRWD) Set to Report Q3 Earnings: What's in Store?

CrowdStrike Holdings CRWD is slated to report third-quarter fiscal 2022 results on Dec 1. – Zacks The company anticipates third-quarter fiscal 2022 revenues in the range of $358 million to ... Read more »

What to Make of the Recent Stock Market Pullback?

I had written up a commentary that I intended to send out this morning that was going to focus on some bigger-picture, strategic items related to market cycles and developing ... Read more »

Happy Ratio Raises $150,000 In Angel Round

Happy Ratio, a foodtech startup, has raised $150,000 in its angel round from ah! Ventures. Happy Ratio The funds will be used to launch a portfolio of all-in-nutrition products, strengthen ... Read more »

Do Options Traders Know Something About Endo International (ENDP) Stock We Don't?

Investors in Endo International plc ENDP need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 21, 2021 $3.00 ... Read more »

8 Outside the Box Strategies for Successful Brand Management

It is an undeniable fact that every business big or small wants to develop itself into a popular brand. For the success of a business, it is highly imperative that ... Read more »

Pinnacle West's (PNW) CAPEX & Clean Energy Aims Augur Well

Pinnacle West Capital Corporation’s PNW planned investments in strengthening its infrastructure and an increasing focus on renewable sources for power generation will help it take advantage of the expected demand ... Read more »

Boris Johnson should use his levelling up agenda to tackle soaring housing costs, says Theresa May

Millions of families face a cost of living crisis over rents, says Theresa May, as she urges Boris Johnson to put tackling “exorbitant”  housing costs at the heart of his ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic